The Federal Reserve's last meeting minutes caused some confusion in the markets about the future of monetary policies and interest rates in the US.
Such confusion reduced the odds of the first US interest rate cut at March, and even caused doubts about such a cut at the May Fed meeting.
We here try to glean some potential hints from the Federal Reserve December 13 meeting about future policies, including:
- No plans to immediately cut rates
Fed policymakers believe that starting interest rate cuts later in the year would be more appropriate to bring inflation reliably down.
- Main interest rates have peaked
Several Fed policymakers believe that mainline interest rates have peaked out, although some opened the way for more rate hikes if needed.
- Fed expected interest rates to remain for for some time
It's clear from the minutes that Fed policymakers expect interest rates to remain high for an extended duration in 2024.
- Fed takes cautious stance
Policymakers have taken a clearly cautious stance with policy decisions, preferring to remain a bit aggressive until inflation is reliably moving towards the 2% target.
Overview
It's thus very clear that the Federal Reserve doesn't expect interest rate cuts for the time being, taking a more bullish stance on policy than expected.
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